1. CHAPTER 6
Segmentation, Targeting, and Positioning: Building the Right Relationships with the Right Customers

2. Roadmap: Previewing the Concepts
Define the three steps of target marketing: market segmentation, market targeting, and market positioning.
List and discuss the major bases for segmenting consumer and business markets.
Explain how companies identify attractive market segments and choose a target marketing strategy.
Discuss how companies position their products for maximum competitive advantage in the marketplace.
Copyright 2007, Prentice-Hall Inc.

3. P&G – Segments the Market
Strategy
Sells multiple brands within the same product category for detergents, soaps, and other goods.
Each brand features a different mix of benefits and appeals to a different segment.
Product modifications appeal to different niches within certain segments.
The Payoff
P&G generates revenues of $4+ billion in U.S. laundry detergent market.
Tide has 34% share of powder and 24% share of liquid market segments.
Combined, all P&G brands account for 75% share of powder and 55% share of liquid detergent markets.
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4. Figure 6-1 Steps in Segmentation, Targeting, and Positioning
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5. Market Segmentation
Geographic, demographic, psychographic, and behavioral variables are used in segmentation.
There is no single way to segment a market.
Often best to combine more than one variable in order to identify smaller, better-defined target groups.
Copyright 2007, Prentice-Hall Inc.

6. Geographic Variables
Geographic segmentation divides a market into different geographic units.
Variables and breakdowns include:
World Region or Country: North America, Western Europe, Pacific Rim, Mexico, etc.
Country Region: Pacific, Mountain, etc.
City or Metro Size: defined numerically
Density: rural, suburban, urban
Climate: northern, southern
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7. Demographic Variables
Differences in age, gender, family size, family life cycle, income, occupation, education, race, and religion can be used to segment markets.
Frequently used in segmentation.
Easier to measure than most other types of variables.
Copyright 2007, Prentice-Hall Inc.

8. Demographic Targeting by Age
Marketing in Action
Demographic Targeting by Age
Crest targets adults with the ad and product on the left, and children with the ad and product on right.
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9. Psychographic Variables
Psychographic segmentation divides a market into different groups based on social class, lifestyle, or personality characteristics.
People in the same demographic classification often have very different lifestyles.
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10. Lifestyle Market Analyst
Marketing in Action
Lifestyle Market Analyst
Using the Lifestyle Market Analyst, marketers can identify other interests that appeal to those consumers who enjoy a particular lifestyle, as well as the demographics of those consumers.
Market profiles of each DMA provide lifestyle information as well.
Copyright 2007, Prentice-Hall Inc.

11. Behavioral Variables Segmentation by Occasion Benefits Sought
Special promotions & labels for holidays.
Special products for special occasions.
Benefits Sought
Different segments desire different benefits from products.
User Status
Nonusers, ex-users, potential users, first-time users, regular users.
Usage Rate
Light, medium, heavy.
Loyalty Status
Brands, stores, companies.
Copyright 2007, Prentice-Hall Inc.

12. Let’s Talk!
Nestle has implemented an occasion segmentation strategy during the Christmas season by marketing special flavors of Coffeemate that complement the holidays.
What other brands COULD develop their own special products or packaging for holidays or other occasions?
Copyright 2007, Prentice-Hall Inc.

13. Segmenting by Benefits Sought
Marketing in Action
Segmenting by Benefits Sought
Citicards’ various products offer different benefits: – rewards – establishing credit – small business benefits – no frills value
Copyright 2007, Prentice-Hall Inc.

14. Geodemographic Segmentation
Claritas, Inc.
Potential Rating Index for Zip Markets (PRIZM)
Based on U.S. Census data
Profiles on 260,000 U.S. neighborhoods
62 clusters or types
Copyright 2007, Prentice-Hall Inc.

15. PRYSM Interactive Tutorial
Marketing in Action
PRYSM Interactive Tutorial
Click the link below:
Select, “Who we are. Redefining our demographics” underneath the “Beyond Words” heading.
Screen at left will appear and tutorial will load and run automatically.
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16. Marketing in Action
PRYSM Zip Code Lookup
Lookup your zip code and learn more about the PRYSM clusters describing people where you live!
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17. Segmenting Business Markets
Consumer and business markets use many of the same variables for segmentation.
Business marketers can also use:
Operating Characteristics
Purchasing Approaches
Situational Factors
Personal Characteristics
This American Express ad targets small businesses.
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18. Segmenting International Markets
Factors used:
Geographic location
Economic factors
Political and legal factors
Cultural factors
Intermarket segmentation:
Segments of consumers who have similar needs and buying behavior even though they are located in different countries.
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19. Intermarket Segmentation
Marketing in Action
Intermarket Segmentation
Teens show surprising similarity no matter where in the world they live. For instance, this teen could live almost anywhere. Thus, many companies target teenagers with worldwide marketing campaigns.
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20. Requirements for Effective Segmentation
Measurable
Accessible
Substantial
Differentiable
Actionable
“Lefties” are hard to identify and measure, thus few firms tailor their offers to this group. “Anything Left Handed” is an exception.
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21. Evaluating Market Segments
Segment Size and Growth
Analyze current segment sales, growth rates, and expected profitability.
Segment Structural Attractiveness
Consider competition, existence of substitute products, and the power of buyers & suppliers.
Company Objectives and Resources
Examine company skills & resources needed to succeed in that segment.
Offer superior value & gain advantages over competitors.
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22. Figure 6-2 Target Marketing Strategies
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23. Target Marketing Strategies
Undifferentiated (mass) marketing
Ignores segmentation opportunities
Such products rarely succeed for long in the American marketplace.
Differentiated (segmented) marketing
Targets several segments and designs separate offers for each.
Coca-Cola, Procter & Gamble (soaps and detergents), and Toyota are a few examples.
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24. Target Marketing Strategies
Concentrated (niche) marketing
Targets one or a couple small segments
Niches have very specialized interests
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25. Concentrated Marketing
Marketing in Action
Concentrated Marketing
Small businesses can reap large returns from niche marketing. This profitable Web site offers access to artistic e-cards on a subscription basis.
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26. Micromarketing
Tailoring products and marketing programs to suit the tastes of specific individuals and locations.
Local Marketing: Tailoring brands and promotions to the needs and wants of local customer groups—cities, neighborhoods, specific stores.
Individual Marketing: Tailoring products and marketing programs to the needs and preferences of individual customers.
Copyright 2007, Prentice-Hall Inc.

27. Choosing a Targeting Strategy
Factors to consider:
Company resources
Product variability
Product’s life-cycle stage
Market variability
Competitors’ marketing strategies
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28. Socially Responsible Targeting
Smart targeting helps both companies and consumers.
Target marketing sometimes generates controversy and concern.
Vulnerable and disadvantaged can be targeted.
Cereal, cigarette, beer, and fast-food marketers have received criticism.
Internet has raised fresh concerns about potential targeting abuses.
Copyright 2007, Prentice-Hall Inc.

29. Product Positioning
A product’s position is the way the product is defined by consumers on important attributes, or as the place the product occupies in consumers’ minds relative to competing products.
Perceptual position maps can help define a brand’s position relative to competitors.
Copyright 2007, Prentice-Hall Inc.

30. Marketing in Action
Positioning
eBay’s positioning is simple: No matter what “it” is, you can find “it” on eBay!
The “it” print and TV ads reflect different types and categories of goods, reinforcing this position.
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31. Figure 6-3 Positioning Map: Large Luxury SUVs
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32. Choosing a Positioning Strategy
Identify a set of possible competitive advantages on which to build a position.
Choose the right competitive advantages.
Select an overall positioning strategy.
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33. Identifying Possible Competitive Advantages
Key to winning target customers is to understand their needs better than competitors do and to deliver more value.
Competitive advantage – extent to which a company can position itself as providing superior value.
Achieved via differentiation.
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34. Sources of Competitive Advantages
Differentiation can be achieved by means of:
Products
Services
Image
People
Which form of differentiation is promoted in the ad at right?
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35. Positioning Errors Underpositioning: Overpositioning:
Failing to really position the company at all.
Overpositioning:
Giving buyers too narrow a picture of the company.
Confused Positioning:
Leaving buyers with a confused image of a company.
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36. Choosing the Right Competitive Advantages
Not all brand differences are meaningful and worthwhile, nor do all differences make a good differentiator.
Each difference has the potential to create company COSTS as well as consumer value.
The best competitive advantages are those that meet seven key criteria.
Important
Distinctive
Superior
Communicable
Preemptive
Affordable
Profitable
Copyright 2007, Prentice-Hall Inc.

37. Positioning and Pampers
Marketing in Action
Positioning and Pampers
Video Snippet
Procter & Gamble markets Pampers and hundreds of other brands. Review this video snippet to learn more about the P&G method of positioning.
Copyright 2007, Prentice-Hall Inc.

38. Figure 6-4 Possible Value Propositions
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39. Value Propositions Marketing in Action
Diaka Vodka is positioned as the world's most expensive vodka, due to its unique diamond filtration process.
Nearly one hundred diamonds of up to one carat in size are used to filter the spirit, resulting in a Vodka with unsurpassed clarity and smoothness.
What value proposition would you expect Diaka’s advertising to promote?
Copyright 2007, Prentice-Hall Inc.

40. Positioning Statements
Marketing in Action
Positioning Statements
To (target segment and need) our (brand) is a (concept) that (point-of-difference).
“To busy mobile professionals who need to always be in the loop, Blackberry is a wireless connectivity solution that allows you to stay connected to day, people, and resources while on the go, more easily and reliably than the competing technologies.”
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41. Communicating and Delivering the Chosen Position
Company must take strong steps to deliver and communicate the desired position to target consumers.
The marketing mix efforts must support the positioning strategy.
Must monitor and adapt the position over time to match changes in consumer needs and competitors’ strategies.
Copyright 2007, Prentice-Hall Inc.

42. Let’s Talk! Take a look at the ad shown at right.
How is the brand being positioned?
What is its value proposition?
Copyright 2007, Prentice-Hall Inc.

43. Rest Area: Reviewing the Concepts
Define the three steps of target marketing: market segmentation, market targeting, and market positioning.
List and discuss the major bases for segmenting consumer and business markets.
Explain how companies identify attractive market segments and choose a target marketing strategy.
Discuss how companies position their products for maximum competitive advantage in the marketplace.
Copyright 2007, Prentice-Hall Inc.